Suppose the Domestic Interest Rate Is 3% and That the Foreign

Multiple Choice

Suppose the domestic interest rate is 3% and that the foreign interest rate is 6%.And finally,assume that the domestic currency is expected to appreciate by 4% during the coming year.Given this information,we know that

A) individuals will only hold domestic bonds.
B) individuals will only hold foreign bonds.
C) individuals will be indifferent about holding domestic or foreign bonds.
D) the interest parity condition holds.